The offshore yuan traded around 6.91 per dollar on Wednesday, holding near its highest level since April 2023, buoyed by a firm daily fixing despite slowing consumer inflation and a continued loose policy stance. The central bank set the midpoint rate at 6.9438 per dollar, its strongest since May 11, 2023, but weaker than estimates, indicating the PBOC’s effort to allow the yuan to appreciate in a steady and measured manner. However, the yuan’s gains were partially capped by the central bank, which reiterated that it would maintain a “moderately loose” monetary stance, prioritizing stable growth and a reasonable recovery in prices. This policy stance came before China’s report showing that annual consumer inflation slowed to 0.2% in January 2026, from 0.8% in December, largely reflecting changes in base effects. Meanwhile, producer price deflation narrowed more than expected to 1.4%, supported by firmer commodity prices and regulatory efforts to curb excessive competition among firms.
